March lockdown will have little impact on GDP – NBU chairman

March lockdown will have little impact on GDP – NBU chairman

The coronavirus lockdown in March will have a fairly small impact on GDP, according to Chairman of the National Bank of Ukraine (NBU) Kyrylo Shevchenko.

According to Ukrinform, he said this in an interview with Interfax-Ukraine.

"We estimate that the lockdown in March will have a rather small impact on GDP, smaller than the one in January. The final estimate will depend on the actual quarantine parameters. Of course, some support will be provided by the statistical effect of the comparison base - from the second half of March last year there was a very strict lockdown throughout the country," Shevchenko said.

He noted that with regard to new lockdowns (the so-called quarantine of red zones), the NBU would consider them in its next macroeconomic forecast, which will be made in April.

"We are now taking several lockdown scenarios to calculate our model: depending on which scenarios the government chooses, we will use them. Of course, in our April forecast we will take into account the tightening of restrictions due to a region or city getting into in the red quarantine zone," Shevchenko said.

However, he noted, when assessing the quarantine factor, two aspects must be taken into account. First, quarantine measures have almost no impact on such sectors of the economy as industry, agriculture, but they significantly affect the services sector and transport. Second, the economy has already largely adapted to quarantine measures, even in the services sector. Accordingly, their influence, Shevchenko said, is not as destructive as in the second quarter of 2020.

"We expect world prices for goods predominating in Ukrainian exports to remain high, while energy prices, according to our estimates, will remain relatively stable. An additional factor is the possibility of a better harvest, as weather conditions were favorable in winter, and the area under winter crops was also increased," Shevchenko added.

The International Monetary Fund expects Ukraine's real GDP to reach 4% this year, up 1% from its previous forecast released last October.


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